An accurate Profit and Loss is essential for determining your business performance and potential tax liability. The Profit and Loss Report shows your total income and expenses for a specified period of time in the account base currency. This report is also referred to as “Income & Expense Statement”.
Figure: Profit & Loss Report for the Year Ending December 2018
A few reasons to use this report:
- Gain an accurate picture of your income versus expenses for a specified period of time.
- Schedule this report on a monthly basis to stay up to date on the financial health of your business.
- Show a chronological record of how your business has performed over a period of time.
The report display is split into the following components:
Sales: This row displays the monthly sales (based on Invoices or Payments) of the business. The sales taxes are excluded in this amount to ensure you don’t overstate your income. This is calculated based on the Revenue parameter setting (read more about that below).
Gross Profit: It is calculated by reducing the Cost of Goods Sold from Total Sales.
Less Expenses: This section will display all other non-draft expenses that are not considered Costs of Goods.
Net Profit: This is calculated by reducing the Total Expenses from Gross Profit. It is the total amount earned (or lost) after Expenses.
Note: The Profit and Loss Report displays data in your account currency. All invoices in currencies other than account base currency are converted using the exchange rate provided on the Invoice or Expense entry. Read more about this here.
There are a number of report parameters you can choose from:
Period: You can choose the number of months that should be displayed on the report. Options include Quarterly (3 months), Semi-Annually (6 months) and Annually (12 months).
Ending: Select the calendar month you need as the last month in the report. For instance, choose June if you would like the report to show data till June.
Year: Enter the year of the ending month you want to run the report for. For instance, selecting Ending month as June and Year as 2019 will end the report with June 2019 as the last month.
Revenue: This option lets you choose how Sales will be calculated.
- Invoiced (Accrual based): Will pull in tax data from any non-draft Invoices and are dated within your date range (both paid and unpaid)
- Cash Collected: Looks at the Payments you’ve received between the selected date range.
Do you need any further help with the Profit & Loss report? Feel free to contact support via chat or email.